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Amazon's Earnings Estimates Show Mixed Signals Amid Downtrend

Amazon's outlook presents mixed signals as EPS and revenue estimates shift. Despite a recent stock price decline of 17.7%, earnings projections indicate potential growth, which may attract cautious investors.

Date: 
AI Rating:   6

Overview of Current Performance
Amazon (AMZN) has seen its shares decline by 17.7% over the last month, which greatly outpaces the broader S&P 500's decline of 8.9%. This drop raises concerns about its near-term performance, especially relative to its industry peers, the Zacks Internet - Commerce sector, which also contracted by 14.4%. Given this scenario, professional investors are keen to understand the underlying fundamental factors impacting Amazon's value.

Earnings Per Share (EPS)
Amazon's current quarter EPS estimate is projected at $1.37, reflecting a year-over-year increase of 21.2%. However, the consensus estimate has decreased by 1.5% in the last month, a slight red flag for investors. For the fiscal year, Amazon is expected to report $6.33 in EPS, indicating a 14.5% year-over-year growth but has faced a minor upward adjustment of just 0.1% over the same timeframe. In addition, the next fiscal year's estimate of $7.26 shows a positive change of 14.8% but has also seen a downward adjustment of 2.4%. The trend in earnings estimates is crucial, as discrepancies can influence stock price momentum.

Projecting Revenue Growth
The sales estimates reveal more cautious optimism for Amazon. With consensus revenue estimates of $154.6 billion for the current quarter (7.9% increase YoY) and $692.16 billion for the fiscal year (8.5% increase), the company's revenue growth indicates stability. Projected revenues for the next fiscal year remain strong at $762.28 billion, marking an increase of 10.1%. The revenue trends, coupled with recent performance of $187.79 billion, growing 10.5% YoY, and a revenue surprise of +0.28%, establish Amazon's potential for continued revenue generation despite the recent stock price struggles.

Valuation Metrics
The Zacks Value Style Score grades Amazon as a 'C', suggesting its current valuation is aligned with its peers in the marketplace. The significance of such a grade cannot be overlooked, as it often reflects sentiment about the stock's intrinsic value relative to market conditions.

Bottom Line
Overall, while Amazon's performance indicates a negative short-term trend, there are signs of robust earnings growth and acceptable revenue forecasts, which could stabilize the stock price in the medium term. The Zacks Rank of #3 (Hold) suggests it may perform in alignment with the market. Therefore, investors might consider holding or evaluating entry points based on these mixed signals.

Stocks:  AMZN